Vireo Paid $21 Million for a Florida Grow Its Landlord Bought for $14.9 Million in 2025

In early November 2025, Kyle Shenfeld, chief executive of the New York real estate firm Rainbow Realty Group, announced his company's first deal in Florida. Rainbow had paid $14.9 million in cash on August 5 for a 415,733-square-foot industrial building on 29.19 acres in Palatka, in rural Putnam County, then borrowed $9,685,000 against it from a regional bank at a fixed 8%. Its tenant, a multistate cannabis operator, had used the building since 2021 as its main Florida cultivation site and, by Rainbow's account, had poured more than $25 million into it, including a 20,000-amp power upgrade. (S5)

"We are very excited to finally be doing business in the state of Florida," Shenfeld said in the release. Rainbow was confident in the tenant's future, he added, "which we are glad to be a part of." (S5)

Rainbow's part lasted about 14 months. During the week of October 12 to 16, 2026, Putnam County recorded the transfer of 160 Comfort Road from Rainbow Palatka FL LLC to a company called 160 Comfort Road LLC for $21 million, according to the Palatka Daily News. It was the largest property transaction in the county that week, nearly three-quarters of the $28.51 million in consideration across the 10 biggest deals. The runner-up was an asphalt plant at $3.2 million. (S4)

The buyer was the tenant. 160 Comfort Road LLC is one of the borrowers on a $60 million real estate loan that Vireo Growth, the Minneapolis-based operator, announced on October 5, and the building is the cultivation and production campus behind Vireo's Green Dragon dispensaries in Florida. Rainbow's sale price was $6.1 million, or about 41%, above what it had paid. (S1, S4)

The Palatka deal is the second time this year Vireo has bought a grow out from under its landlord, and the pattern says something about where cannabis capital stands in late 2026. In May, Vireo paid $88.5 million for its 389,000-square-foot facility in Johnstown, New York, from Innovative Industrial Properties, the cannabis REIT that spent the last decade buying operators' buildings and leasing them back. To close, Vireo took a $49 million seller note from IIP at 15% interest and a $41 million second-mortgage loan from Chicago Atlantic Financial Services. Five months later it refinanced the IIP debt at 8.5%. (S2, S1)

The October loan, from what Vireo described only as "a U.S. commercial bank and institutional lender," runs to April 2, 2034. About $49 million refinances the senior debt from the New York purchase and about $11 million funds Palatka, secured by first mortgages on both buildings and a pledge of the property subsidiaries. Vireo says it operates in 10 states with more than 170 dispensaries. (S1)

The New York paperwork explains the hurry. Vireo's May announcement said the IIP seller note matured on May 25, 2027, with two one-year extension options, and sat as a first mortgage ahead of Chicago Atlantic's loan under an intercreditor agreement. Vireo guaranteed the note, and Vireo Health guaranteed the Chicago Atlantic loan. Refinancing in October replaced a 15% obligation due in about seven months, absent extensions, with an 8.5% loan that runs more than seven years, and it folded the Florida purchase into the same package. Vireo exercised a purchase option written into its original IIP lease, the clause that lets a tenant set the timing of a sale rather than wait on its landlord. (S2, S1)

For most of the past decade, sale-leasebacks were how plant-touching companies raised money that banks would not lend. A REIT bought the greenhouse, the operator got cash and a long lease, and the landlord collected the rent. When that arrangement stops making sense for the tenant, the choices narrow to renegotiating, leaving, or buying the building back. Vireo has now chosen the last option twice. (S2, S5)

Vireo has been on the buying side of that unwinding. Its second-quarter earnings call, filed with the Securities and Exchange Commission, lists the PharmaCann acquisition that deepened its Colorado position among the deals that closed after June 30. In prepared remarks for the August 11 call, chief executive John Mazarakis said the company had closed Eaze, Hawthorne and Bridgewell and announced FLUENT, C21, Planet 13, a Cannabist asset purchase and a four-deal entry into Ohio. Once pending deals close, he said, Vireo expects about 270 dispensaries across 15 states. (S3)

Florida is where the real estate matters most. The state runs a vertically integrated, medical-only market, so every licensee has to grow what it sells. Mazarakis said the Planet 13 merger adds 33 Florida stores which, combined with Green Dragon and FLUENT, would give Vireo more than 100 stores and the second-largest retail footprint in the state. Palatka is the farm behind that shelf space. Owning it removes a landlord from the cost of every gram, though it also puts a mortgage on the balance sheet where a lease used to be. (S3, S1)

The bet runs against some of the market's signals. MJBizDaily, which first tied the Palatka buyer to Vireo, reported that Florida regulators awarded 22 new vertically integrated medical licenses last month after a long process, adding competitors to a market of roughly $2 billion in annual sales, and that some Florida operators have signaled they want out of the medical-only market. Efforts to legalize adult-use sales, bankrolled by Tallahassee-based Trulieve, have failed against opposition from Gov. Ron DeSantis. A company that owns its Florida grow outright is betting the medical market stays big enough to justify the building. (S8)

Chief financial officer Tyson Macdonald presented the refinancing as proof of access to mainstream credit. "The facility carries an 8.5% interest rate, among the most attractive rates in the cannabis sector," he said on October 5, and it "reflects the strength of our business and continued access to institutional capital." In August he described a separate asset-based credit line through Vireo's non-cannabis segment with Bank of Montreal and other institutions, a $65 million commitment priced at a margin over the Secured Overnight Financing Rate. (S1, S3)

“We are not the loudest operator out there, and that is by design.”

— John Mazarakis, Co-Executive Chairman and CEO, Vireo Growth, Q2 2026 earnings call script filed with the SEC

The numbers Macdonald read on that call also complicate the story. Second-quarter revenue reached $209.3 million, up 335% from a year earlier on a reported basis, and net loss narrowed to $0.1 million. But adjusted EBITDA margin fell to 19.8% from 27.7%, and the cannabis segment's margin slid to 22.4% from 27.7%, which he attributed to lower-margin acquired businesses and the new agribusiness segment. Mazarakis told investors the company would not slow down and that 2027 would bring "a clearer financial picture" of the strategy. The same filing lists, among its risk factors, conflicts of interest and Vireo's ability to raise additional financing. (S3)

One relationship in the New York deal deserves a closer look. Mazarakis became Vireo's chief executive in December 2024; Vireo's announcement that month described him as a co-founder of the lender Chicago Atlantic. In the same release, Vireo said an affiliate of Chicago Atlantic was buying shares in a $75 million equity offering and that Chicago Atlantic was a "related party" under Canadian securities rules. Seventeen months later, Chicago Atlantic Financial Services supplied the $41 million second-mortgage loan on the Johnstown purchase. Vireo's May announcement gave the loan's size and security but no interest rate. (S6, S2)

None of that is unusual in an industry where a handful of specialty lenders finance most deals and executives move among them. It does mean that as Vireo swaps REIT leases for debt, investors are watching which lenders sit on which layer of the capital stack, and at what cost. Vireo has said additional terms of the October loan will appear in its regulatory filings. (S1, S2)

Kyle Kingsley, MD, Vireo's co-executive chairman when Mazarakis arrived, framed the 2024 reset as a bet on the balance sheet, saying the transactions would "transform our balance sheet with an equity raise completed at a substantial premium to market." The Palatka and Johnstown purchases test that bet in the most physical way possible: two buildings totaling more than 800,000 square feet, now carried as owned real estate in two limited-license markets. (S6, S1, S2)

For landlords, the Palatka sale is a reminder that a cannabis tenant's improvements can become the tenant's leverage. Rainbow bought a building that its tenant had already spent more than $25 million wiring and fitting out for cultivation. The best-placed buyer for a 20,000-amp grow in Putnam County was always going to be the company growing in it. Rainbow still sold for $6.1 million more than it paid, before transaction costs and not counting rent collected. (S5, S4)

Shenfeld's release a year ago called the building its tenant's primary Florida cultivation facility and promised Rainbow would be part of its future. It was, briefly. Rainbow's fourth fund, the release said, was taking new investors through the end of 2025. In October 2026, Rainbow's name came off the Palatka deed. The power, the grow rooms and the more than $25 million of tenant improvements now belong to the operator whose Green Dragon business installed them, along with a mortgage that comes due in 2034. (S5, S4, S1)